Hyatt lowers full-year RevPAR guidance in Q2 earnings

CHICAGO — Hyatt Hotels Corp. reported a systemwide hotel RevPAR increase of 4.7% but reduced its full-year RevPAR and adjusted EBITDA guidance as part of its second-quarter earnings.

The Chicago-based company also saw net room growth of approximately 4.6% in Q2 and said it projects net room growth of 5.5% to 6% for the full year compared to 2023. The gains helped generate record gross fee revenue of $275 million in the quarter.

At the same time, Hyatt’s pipeline reached a new record of 130,000 rooms (for approximately 670 hotels), up 9% year over year, while its loyalty program saw membership increase by 21% year over year to a record 48 million members.

“We posted solid second-quarter results demonstrating our differentiated positioning and continued momentum,” Mark Hoplamazian, president and CEO of Hyatt, said. “These achievements demonstrated the strength of our asset-light earnings model.”

What the analysts said

Analyst Michael Bellisario of R.W. Baird said Hyatt’s adjusted RevPAR and EBITDA reductions are likely due to slowing growth in greater China.

“Still lots of moving pieces in Hyatt’s model as a result of the segment realignment, and we view expectations as recently reduced following hotel brand peers’ earnings reports last week,” he said. “Nonetheless, 2Q24 Adjusted EBITDA of $307 million missed Baird/Street forecasts at $308-$312 million, and full-year guidance was reduced ~2%.”

Analyst C. Patrick Scholes of Truist Securities said the earnings miss is similar to comments made by Marriott last week about weakness in China.

“We view the miss as driven by core operations (net fees of $259M compared to consensus of $273M)... While commentary in the earnings release was minimal as to the earnings performance and slightly lowered 2024 guidance, we speculate that, like Marriott, weakness in greater China was a driver in the miss and impactful in the FY guide revision… Additionally, we believe there may be some negative impact on 3Q in the Caribbean from the recent hurricane.”

Other Q2 results

Hyatt said its second-quarter results reflected strong performance in business transient and group travel, with U.S. RevPAR increasing over 2% from group and business travel, but said leisure travel was negatively impacted by the timing of the Easter holiday, renovations at large resorts and the continued impact from the 2023 Maui wildfires. The company said travel within Europe remained strong, driven by inbound travel from the U.S. and large one-time events like the 2024 Euro and Taylor Swift tour dates.

Hyatt said greater China was impacted by strong outbound travel from the country to other markets within Asia, including Japan and South Korea. In Asia Pacific excluding greater China, RevPAR increased approximately 18% during Q2.

Eighteen new hotels and over 3,200 rooms joined the Hyatt portfolio in Q2 in addition to previously announced sales of Park Hyatt Zurich, Hyatt Regency San Antonio Riverwalk and Hyatt Regency Green Bay and the acquisition of the “me and all” hotels brand from Lindner Hotels, Hyatt said it expects to close on the sale of an asset by the end of August (Bellisario says it’s the 1,640-key Hyatt Regency Orlando) which would complete the company’s $2 billion asset sell-down commitment.

Last month, Hyatt was rumored to be pursuing an acquisition of Standard Hotels, but that was not mentioned in its initial earnings.

Through the first half of the year, Hyatt has total debt of $3.8 billion and total liquidity of approximately $3.5 billion, including $1.9 billion in cash or cash equivalents and short-term investments. The company has borrowing availability of nearly $1.5 billion under its revolving credit facility.

Other notes from Q2 earnings: 

• Hyatt’s comparable systemwide all-inclusive resorts net package RevPAR increased 3% for 2Q23
• Net income was $359 million and adjusted net income was $158 million
• Adjusted EBITDA was $307 million
• Hyatt repurchased approximately 907,000 shares of Class A common stock for $134 million
• Full-year net income is projected between $1.055-1.115 million
• Full-year adjusted EBITDA is projected between $1.135-1.175 million